Wanda runs a business selling widgets and has one competitor, Kit. Both must decide whether to set a high price ($20) or a low price ($15). Wanda's cost to produce one widget is $10. The number of widgets Wanda will sell depends on both her price and Kit's price, as shown in the table below:
| If Kit Prices High | If Kit Prices Low | |
|---|---|---|
| Wanda Prices High | 100 units | 50 units |
| Wanda Prices Low | 150 units | 80 units |
Wanda's management team has concluded that Kit is most likely going to set a High Price. Based on this single assumption, what is Wanda's profit-maximizing pricing strategy?
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Wanda's Profit Calculation with Low Price vs. Kit's High Price
Competitor-Based Pricing Decision
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Competitor Price Expectation and Profit Maximization
Wanda runs a business selling widgets and has one competitor, Kit. Both must decide whether to set a high price ($20) or a low price ($15). Wanda's cost to produce one widget is $10. The number of widgets Wanda will sell depends on both her price and Kit's price, as shown in the table below:
If Kit Prices High If Kit Prices Low Wanda Prices High 100 units 50 units Wanda Prices Low 150 units 80 units Wanda's management team has concluded that Kit is most likely going to set a High Price. Based on this single assumption, what is Wanda's profit-maximizing pricing strategy?
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Analysis of Strategic Pricing Scenarios
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